3. RESEARCH METHODOLOGY
4.4. Summary of the content analyses
The abstraction of responsible employer is founded on objective of broaden the diversity and inclusion agenda to various backgrounds. This means that Danske Bank has established clear numerical objectives of how many women should be in management position in the near future. Also, providing equal opportunities for all employees to develop own skills and expertise is important part of being responsible employer at Danske Bank.
4.3.5. Abstraction of community engagement
Teaching personal finance in local communities is the spine of the community engagement abstraction. For example, Danske Bank has developed free educational materials and online learning games for children and young people in order to promote their financial knowledge. These games also provide ideas for parents about how to talk about money and personal finance with their children. Further, Danske Bank performs classroom visits in terms of introducing for students concepts such as income, expenses, interest and cyber crime in banking environment. This indicates that corporate volunteering is one of the main initiatives of how Danske Bank engages with communities. For example, in 2015, employees spent more than 15 000 hours on volunteering.
Another mostly valued initiative is the philanthropy perspective meaning direct donations to numerous social causes.
4.4. Summary of the content analyses
It is clearly brought up in all CSR reports that all of the analyzed organizations view that they have a responsibility to operate in a socially responsible manner.
This indicates that the Finnish financial sector is undergoing a radical change in terms of the clearly announced willingness by managers to engage socially responsible banking activities and policies. For example, the observation that all of the analyzed organizations are seeking to be at the forefront of this transformation signifies that managers have acknowledged the importance of CSR in today’s banking environment in Finland as well as globally.
It is suggested here that the analyzed organizations have all adopted very similar emphases to engage the increased demand for socially responsible banking activities and policies. There are differences to be noticed between clusters within a single abstraction, but nevertheless all the abstractions can be compressed under homogeneous themes. The figure underneath elucidates that the core emphases of CSR by the biggest organizations at the Finnish banking industry are responsible business connection, compliance culture, environment and responsible employer as well as community engagement.
Figure 12. Summary of the content analyses.
In all of the reports, it is commonly agreed that although own business operations do not include major direct negative impacts towards society, such impacts may emerge indirectly from the various established business connections. In other words, it has a significant impact in society of how a massive financial organization invests, funds and spends its money.
This notion of with whom a financial organization establishes and cherishes business relationships raises concerns among citizens. This indicates that all of the analyzed organizations want to assess very carefully with whom they run business operations because they do not want to be dragged into middle of a reputation crisis via an irresponsible business practice of their business connection. Especially, supply chain as well as invested and funded business connections have acquired the main focus within every report regarding to this matter. Given that, the responsible investment and the responsible procurement clusters are the two clusters that can be found from every content analysis under the abstraction of responsible business connection.
The main parts of the responsible investment cluster are active ownership and integration of environmental, social and governance (ESG) risk assessment into the investment process. Active ownership means in essence an action of actively screening new and existing investment targets for violations of international principles of CRS. In order to facilitate this screening process, all of the analyzed organizations have established responsible investment standards that all investment targets are required to meet. International commitments and self-‐‑
regulated policies play key roles in the formation of the investment standards.
An actor that violates these standards may be removed from the investment list, if there is not a genuine interest to adapt these standards. In other words, the first step is to try to affect the actor and only after that the actor will be excluded from the funds. This policy is aimed to encourage investment targets to engage CSR more effectively than a direct rejection. In addition, responsible investment instrument like green bonds are also important building blocks of this cluster.
The responsible procurement cluster is based on similar ideas as the responsible investment cluster. The key action is here to demand that all suppliers operate according to socially responsible supplier standards placed on them.
Monitoring misconducts of these standards and actively persuading suppliers to enhance their CSR engagements are also essential parts of the responsible procurement cluster. In summary, it is argued here that the fundamental idea of the abstraction of responsible business connection is to require, monitor and finally if necessary push business connections towards stronger and more profound CSR commitment. This means that the analyzed organizations are willing to use the power they possess towards their business connections in order to promote socially responsible business philosophy.
Another shared emphasis that has emerged in every content analysis is the abstraction of compliance culture. The ultimate objective of this emphasis is to integrate CSR policies and activities into daily business operations and that way to organization culture. It is claimed here that this emphasis is based on the factor that financial organizations are facing today more complicated and heavier regulation framework than ever before. Now, it seems that the organizations are answering this requirement by strengthening their compliance culture with more structured governance of CSR related issues. The idea behind this action is that a formal governance structure facilitates the penetration of CSR policies into organization culture because all employees are then clearly informed about how they should act when they are facing issues such as moral and ethical dilemmas, money laundering, bribery and corruption.
The main method to strengthen compliance culture throughout an organization is ongoing training of entire personnel. The core of this training regardless an employee’s role, position or location is some sort of internal code of conduct that contains the main CSR principles of an organization. This kind of code of conduct seems to be constructed by mixing international commitments, external official regulations and internal self-‐‑regulations. This indicates that a code of conduct is normally based on mandatory legal regulations as well as self-‐‑
imposed regulations. In principle, the code of conduct is argued here to be the most important function of CSR within every analyzed organization because it covers the total CSR framework and works as a beacon for correct socially responsible behavior whatever issue is in question.
Another mutual emphasis is the environmental perspective that can be divided into inner and outer dimensions. The core of the inner perspective is the reduction of own ecological footprint throughout an entire organization. Both Nordea and Danske Bank have even gone so far by announcing that their aim is to become eventually carbon neutral corporations. Typical inner environmental activities are reduction of travel emission and reduction of total use of energy and waste in offices. Implementing new technologies and new procedures into business models often do this reduction Moreover, other important part of the inner environmental perspective is to acquire carbon offsets equal to the amount of carbon dioxide emitted as a result of needed energy to run daily business operations.
The outer perspective is devoted to the standpoint that financial organizations should take a part to the climate change movement by encouraging their business connections to reduce their own ecological footprints. In other words, the financial sector can help to limit climate change by creating a financial infrastructure that supports a low-‐‑carbon economy. Given that, every analyzed organization has established green bonds and other environmentally friendly investment products and policies aimed to encourage business partners to engage ecological initiatives and projects. For example, Nordea has established a treasure called The Start Funds that includes only firms that have received enough high ratings from environmental, social and governance assessments.
The responsible employer abstraction is mainly associated with the endorsement of gender diversity. The diversity of workforce objective is based on perspective that a successful organization has to mirror the society where it operates because diverse workforce is able to better serve diverse customer base by possessing deeper insights from the needs of various customers.
Implementing prevention of discrimination training as a mandatory course to all leadership pipeline programmes and establishing hiring policies to ensure that no gender will make a majority of applicants are the two main principles to achieve the diversity workforce objective. Furthermore, it seems that in the future the focus will move beyond gender equality to cover variety of demographic backgrounds mirroring society and people living there.
The community engagement abstraction includes all the policies and activities where an organization is actively engaging with society. As all of the analyzed organizations operate within the financial industry, these organizations have decided to utilize their expertise by teaching personal finance management for free. The starting point is here that many recent studies have discovered that there seem to be disturbing gaps in understanding of financial issues, especially among young citizens. The core idea of this money management is to enable employees to voluntarily share their expertise by engaging with local communities. This action is indeed aimed to increase the understanding of financial issues, but also to give employees the feeling of helping others by doing well. Promotion of small entrepreneurship as well as philanthropy perspective including direct cash donations and sponsorships of culture and sport are also the two central areas in the community engagement abstraction.
As noted previously, all of the analyzed finance organizations have adopted very similar approach to handle the CSR demand. This may indicate that these organizations continually benchmark each other in order to keep own CSR engagement level at least at the same level as the mainstream level in the field.
This observation raises the question that is there really a genuine desire to engage socially responsible banking activities and policies, or are these organizations just doing the minimum. In other words, no one can claim that an organization is socially irresponsible because the organization can plead that it is as responsible or irresponsible than everyone else in the same industry.
Additionally, majority of socially responsible banking activities and policies implemented by analyzed organizations seem to lack clear numerical objectives and measure plans. This may indicate that most of these initiatives have been implemented without any concern what would be their social impacts in society. This would mean that CSR is still seen as a public relation management tool aimed to mitigate the pressure to engage responsible banking procedures.
Another explanatory factor behind the discovery that the organizations have adopted very similar approach to deal the CSR demand may be that every analyzed organization is more or less similar than others in terms of what it is and what it does. This means that all of the analyzed organizations are facing same kinds of demands and pressures to engage CSR and thus the required and adopted socially responsible banking activities and policies are the same.
Although it is strongly brought up during the theory section that there is not a one size fits all approach regarding to CSR, the empirical findings of this thesis suggest that the size, industry and geographic location, which are the common factors here, affect how organizations are getting involved with CSR.
Further, it seems that the global CSR movement seeks to establish universal standards and guidelines of what the concept of CSR should fundamentally stand for. This kind of development would likely lead to fairly structured and formalized CSR activities and policies, especially in massive corporations.
The demand of CSR would be translated into codes of conduct that would guide all business decision processes. There would be committees and other official functions within an organization to ensure implementation of CSR activities and policies into daily business operations and culture. The empirical findings of this thesis support this perspective by and large.
5. CONCLUSION
The endorsement, that companies should bear some kind of responsibility towards society and take a broader standpoint beyond shareholders to cover also interests of important stakeholders during a decision-‐‑making process, was properly introduced in the first time in the modern literature in the 1950s.
Since then, the concept of CSR has been increasingly receiving attention and recognition as well as complementary and overlapping themes and approaches in both the academic and practitioner communities around the whole world (Carroll & Shabana 2010). Having said that, the dominant focal point within the research field of CSR has been constantly evolving over time. Today, the cardinal research approach is moving from a macro social level and ethics-‐‑
oriented arguments to an organizational level and performance-‐‑oriented arguments (Lee 2008). Furthermore, although there have been arguments about CSR as an illegitimate business policy (Friedman 1970; Karnani 2011), an increasing majority of organizations have committed to engage socially responsible business activities and policies. This acknowledgment indicates strongly that the concept of CSR has become an inseparable business policy in today’s mainstream business thinking (Lee 2008; Carroll & Shabana 2010).
However, despite the long literature history and the broadly acknowledged acceptance, the concept of CSR has remained multifaceted and incoherent.
Scholars have strived for a long time to come to a mutual conclusion about why and how companies should engage CSR and to whom these responsible actions should be aimed for without generally accepted consensus. The key reason behind this complexity is that the term CSR has gained so many different meanings in so many different contexts. This has eventually led to various connected and disconnected approaches and emphases within the field of CSR (Lee 2008; Carroll & Shabana 2010). For example, it seems that different kinds of firms face different kinds of pressures and demands by society to engage CSR based on what they are and what they do (Crane, Matten & Spence 2014: 12-‐‑13).
Further, different actors tend to define CSR through own agendas (Sethi 1975).
In summary, it has been argued that the instrumental, the political, the integrative and the ethical theory groups form the key approaches in the theory field (Garriga & Méle 2004). The principles of CSR are also designed to facilitate the understanding of the relation between business and society (Wood 1991).
Despite of the growing enthusiasm of the business opportunities streaming from CSR engagement, many companies are facing difficulties when planning and implementing CSR initiatives. One major stumbling block in planning is that companies engage CSR with too generic approaches making the actions much less productive than they could be both business and society. Every CSR initiative should reflect the core mission of an organization and thus CSR strategy and business strategy should be fused together into one main strategy (Porter & Kramer 2006). Given that, it is put forward here the planning process should be understood through the cultural context of each organization because the level of social responsibility in an action is always embedded with the framework of time, environment and the very nature of the parties involved.
This indicates that CSR planning should be individualized (Sethi 1975).
It is suggested here that the holistic model introduced in the end of the theory section facilitates the understanding of the concept of CSR. Firstly, according to the pyramid of CSR, which forms the frame of the model, a business model should be first designed to tackle required economic and legal responsibilities.
Then, expected ethical responsibilities should be included into the business model. The highest social responsibility level is when the business model meets desired philanthropy responsibilities (Carroll 1991). The steps of the pyramid also illustrate the level of responsiveness for the demand of CSR. Given that, organizations are seen to be reactive, defense, accommodation or proactive actors regarding the way of how they address the concept of CSR (Carroll 1979).
Secondly, in order to facilitate the process of implementing CSR initiatives, cause promotion initiative, cause-‐‑related marketing initiative, corporate social marketing initiative, corporate philanthropy initiative, community volunteering initiative and socially responsible business practice initiative are represented (Kotler & Lee 2005: 46). According to the cultural context perspective, an organization should select the most suitable initiative based on the current circumstances (Sethi 1975). Furthermore, how managers prioritize and balance various demands by numerous stakeholders is often a challenge facing many companies due to limited resources. It is proposed here that CSR initiatives could be targeted for latent stakeholders, expectant stakeholders, definitive stakeholders or a combination of them (Mitchell, Agle & Wood 1997).
Finally, perhaps the most crucial part of the model is the six dimensions of CSR forming the core of the model. This means that CSR planning should be based on the integration, voluntariness, values, environment, stakeholder and economic dimensions. In other words, every organization should bear a responsibility to pursue financial success while voluntarily integrating socially responsible business activities and policies into core business values. These responsible activities and policies should especially cover environmental and stakeholder issues. (Dahlsrud 2008; Crane, Matten & Spence 2014: 9.)
It is suggested here that the core emphases of CSR by the analyzed financial organizations are responsible business connection, compliance culture, environment and responsible employer as well as community engagement.
These emphases reflect at large the emphases found in the literature of CSR indicating that the selected organizations have incorporated different CSR emphases broadly into their CSR framework.
It has been discovered that all of the analyzed organizations are operating approximately where the expected ethical and the desired philanthropy responsibilities locate. This means that the organizations are integrating socially responsible banking policies into their daily business operations. These policies are often above the current law indicating that analyzed organizations go beyond legal minimum to self-‐‑regulation in some extent. Moreover, the stakeholder dimension is especially associated with the responsible employer and responsible business emphases. In other words, employees, suppliers and investment targets are the most important stakeholders in an ethical sense.
Obviously, customers have also their own legitimate place here. Furthermore, the environment dimension is basically a synonym for the environment emphasis. In addition, the community volunteering and the socially responsible business practice initiatives are clearly the most utilized initiatives.
Finally, the debate around the concept of CSR is founded on three perspectives.
Someone views it as an illegitimate business policy that gnaws resources of firms and money of shareholders. For others, it is a public relation management tool to ease the pressure of CSR by appearing to be a responsible actor via shiny reports and orations while maintaining an irresponsible business model. For still others, it represents a genuine opportunity to make an actual effort for a
Someone views it as an illegitimate business policy that gnaws resources of firms and money of shareholders. For others, it is a public relation management tool to ease the pressure of CSR by appearing to be a responsible actor via shiny reports and orations while maintaining an irresponsible business model. For still others, it represents a genuine opportunity to make an actual effort for a